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Business Problems With Real Estate Solutions: Growth & Expansion 1

Posted by Ann Salas on November 20, 2019
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Growth & Expansion

I need to hire more staff, but we’re running out of room.

If you’re a high growth company or a startup, it can be difficult to accurately anticipate your headcount over the typical 5-10 year lease period expected by landlords.  However, there are aspects of your lease that can be structured to accommodate for the unexpected growth:

  1. Relocation clause:  One of the best things you can do as a high growth company is partner with an owner that is willing to tear up your lease and relocate you within their building portfolio at any point in your lease.  From the owner’s perspective, they would rather keep you as a long term tenant in their portfolio rather than you sublet your space and relocate with another owner.  The key to this is finding owners that have significant portfolios within your desired geographic area.  Local owners willing to add in relocation clauses include Capasso Realty of Newton, Haynes Management of Wellesley, Duffy Properties of Waltham, and Boston Properties.
  2. Right of first offer:  When selecting an office location for a high growth company, finding an office building with room to grow can be a remedy to prematurely outgrowing your lease.  Selecting an office suite that has vacant space adjacent and adding a Right of First Offer clause provides you as the tenant the opportunity to absorb the additional space before another company occupies it.  This provides you additional time to observe your growth pattern and grow in stages rather than paying for space you may or may not need in the future.  Note that there is lease language for the Right of First Offer and Right of First Refusal.  Owners typically are more open to adding in ROFO language as it is less of a restriction on their leasing capability.

By working with your real estate broker and attorney to add these two clauses, you reduce your risk of outgrowing your office space prematurely.  This way you can determine if it is better to sublease and relocate or grow in stages to minimize overhead costs.

For questions or more creative real estate solutions to the repercussions of high growth, please reach out to our Director of Corporate Services, Elizabeth Holmes – 508-655-5029.

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